Securities Times quoted industrial analysts said that as the world's biggest aluminum producer, China will impose 15% tax on aluminum alloy export as of August 20th to curb over investment in energy intensive industries. That might give a heavy blow to domestic aluminum market, which has already been plagued supply glut. Meanwhile, the news has sent global aluminum price to break over USD 2000 per tonne on Monday. However, domestic forward contacts gains merely CNY 70 per tonne to close at CNY 18,455 per tonne.
The investors appear to be calm since they have been speculating the tax for several months. The government has started to discourage export of high energy-consuming and highly polluting as early as 2004. Beijing has kept a close eye on electrolytic aluminum sector as it battles severe power shortage over the years.
The authority first revoked tax rebate on aluminum pig and imposed tariff on the metal's export. It has taken similar steps to curb export of aluminum and the metal's alloy. The data shows that China's un-forging aluminum, including virgin aluminum and un-forging aluminum alloy adds up to 430,000 tonnes in the first six months up by 57.7% from same period of last year.
According to China International Capital Corporation in a recent report the new tax would further depress sluggish domestic electrolytic aluminum market, noting that China's un-forging aluminum alloy export totals 380,000 tonnes in the first half, representing 23% of the country's total aluminum product exports and 5% of its electrolytic aluminum consumption. Therefore, this would dampen domestic electrolytic aluminum consumption and put the price under downward pressure.
The report said electrolytic aluminum price would have limited downward scope bolstered by escalating cost. The production cost of virgin aluminum has already surged to CNY 17,500 per tonne at the moment following steep rise of oil price.
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15% export tax to weigh on aluminum alloy price do
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Posted - 08/20/2008 : 03:54:26
